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Email Version, Section 2, Thursday 04/26/2001
The SplitTrader.com Newsletter           Thursday 04/26/2001 1 of 1
Copyright 2001, All rights reserved.
Redistribution in any form is strictly prohibited.

 - Your World Leader for Trading Stock Splits on the Internet -

Posted online for members at: http://www.SplitTrader.com

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http://www.splittrader.com/htmlemail/042601_1.asp
==================================================================

In This Newsletter:
===================

Market Commentary | Construction Zone
Definition of the Day
Thursday's Split Announcements - JNJ
Friday's Expirations
Stock Plays - New - Updates - Drops
Friday's Play-of-the-Day - MKC

==================================================================


Market Commentary
=================

Construction Zone

You know the road signs, the ones on the highway that warn you
at you will be "experiencing" construction hazards over the next
ten or so miles.  Well, there is no more appropriate place for
one of those big orange placards than on the corner of Wall and
Broad.  This will be a designated hardhat area for the next three
months at least, as the bulls and bears battle it out, and the
market attempts to trade in the demolition ball for the cement
truck (to build a foundation, of course).

Although today's session was not the best as far as the end
result, we saw more signs that the market believes that we are in
the clear.  As I mentioned last week in this piece, the cyclicals
(the early cycle stocks) have to start rallying before the rest
of the market can join the fun.  Today we saw the Morgan Stanley
Cyclical Index (CYC.X) jump 7.83.  It closed just under where it
left off on that fateful date last week when the Fed cut rates by
50-basis points.

The basic material stocks that do best when the economy is
turning around also continue to amaze.  The steel stocks and
aluminum stocks, which have been slowly moving higher, are now
breaking out to new highs and are actually holding up for now.

Chart of Alcoa:



Rounding out the "signs of a turnaround" trifecta today, were the
financial stocks.  The brokers, insurance companies and some of
the banks are finally starting to stir.  This may signal the
possibility of increased lending, more trading, more underwriting
and more merger activity.  All this of course means more profits
for the financial companies that have a hand in all these
transactions, but more importantly, all these types of
transactions serve to goose the economy and corporate profits.

An illustration of the recent resurgence in the financials can be
seen in our Splittrader Current Play, SouthTrust (NYSE:SOTR).
The stock broke out to new highs today after emerging from a
tight base pattern.  Even if the banks decide to pull back a bit,
most have sturdy bases, which should provide support in the near
term.

Chart of SouthTrust Corp.:



So it's these areas that will be pouring the cement and laying
the groundwork that will enable the tech area to come in later to
really start raising dust.

Today's Markets

The above-mentioned sectors helped to lift the old-economy DOW
(INDU), and served to attract money away from the NASDAQ (COMPX)
in today's session.

The NASDAQ fell by 24.92, or 1.21%, to close the day at 2034.88.
Volume came in at 1.9 billion shares traded.  As long as the
NASDAQ can stabilize here and move sideways, more and more folks
will get comfortable and will decide to commit capital to four
lettered stocks.  Although, a little more distance from the
psychological 2000 level would certainly do the job as well.

The DOW mustered a 67.15 gain, which lifted the old-economy
average back over its 200-dma at 10615.  The DOW ended the day at
10692.35 after peaking at 10766.98 earlier in the session.
Volume was moderate, with 1.5 billion shares trading hands.  Of
particular note is the fact that new highs beat new lows 163 to
22.

On the treasurys front, long-dated issues that heretofore had
been taking a beating, decided to reassert themselves on the
heels of a Treasury buyback in the 30-year.  The 30-year bond
added 30/32 and the yield sank back to 5.705%.  The 10-year note
jumped 19/32 to yield 5.185%.

Thursday also brought the release of the Employment Cost Index
(ECI) and the weekly jobless claims number.  The numbers, as
expected, were bad, which means the market liked them.  Huh?
Well, since the market is a forward-looking instrument, it takes
the bad economic news as a sign that the Fed will continue
easing, thus the positive slant to the weak jobs figures.

Specifically, the first-quarter ECI rose by 1.1% versus
expectations of 1.0% (largely due to higher healthcare costs) and
the weekly jobless claims rose 18,000 to 408,000.  Jobless claims
broke above 400,000 for the first time in five years, as layoffs
have been mounting across many different sectors.

Stocks and Sectors on the Move

Energy stocks were again the darlings of the day, as earnings and
higher gas/oil prices continued to rise.  May unleaded gasoline
futures rose as high as $1.109 a gallon, the highest in ten
years, as analysts expect tight supplies for this summer's
driving season.  In addition, there are concerns that the power
issue in California will affect the oil refineries in the Golden
State.

On the earnings front, Halliburton (NYSE:HAL) rang in with
profits of $0.25/shares versus expectations of $0.22/share.  The
oil service stock gushed $3.51, or 9.09% to $42.13.

Challenging the energy sector early in the session was the
software index, as measured by the GSTI Software Index (GSO.X).
The sector was lifted in the morning by Peoplesoft (NASDAQ:PSFT),
which reported first-quarter earnings of $0.11/share as opposed
to estimates of $0.09/share.  PSFT rocketed on the news, gaining
$6.69, or 22.35% for the day to close at $36.62.

Microsoft (NASDAQ:MSFT) also woke up on the right side of the
bed, as it appeared it wanted to breakout to new highs early in
the day.  Instead, it got cranky and headed back under the covers
with the rest of tech land to end off $0.56 at $69.13.

The telecomm sector finally had reason to turn its frown upside
down and smile for a while.  Unfortunately, the smile turned into
a pucker later in the day as investors stopped to ponder the
upside catalyst, Worldcom's (NASDAQ:WCOM) earnings release.

WCOM reported in line first-quarter earnings of $0.25/share but
also enthusiastically reiterated that they see a pick up in
business in the second half of the year.  After being up more
than 10% on the news, WCOM settled back to close up by just $0.35
to $19.74, as investors obviously doubted Worldcom's projections.

Lastly, in after-hours earnings news, Corning (NYSE:GLW) reported
profits of $0.29/share versus estimates of $0.28/share.  And of
course, the almost obligatory job cut announcement followed.  In
Corning's case they will lay off 4,300 workers by the end of the
month.  They also trimmed their full year earnings from $1.20-
1.30/share to $0.90-$1.00/share.  At last check, the stock was
little changed form its closing price of $21.00.

Looking Forward, Always Forward

Keep your eyes on the first-quarter GDP release before the bell
on Friday.  Economists are expecting a rise of 1% over the
fourth-quarter figure, but estimates are all over the board.
Some are expecting a blow out number due to accounting quirks in
how the government recognizes imports, and some are expecting a
much lower number because of all data we have received to date
points to weakness in the economy.

This is the thermometer reading we have been waiting for in order
to check the health of the economy.  Either we are in need of
antibiotics, or it's back to the playground for another trip on
the merry-go-round.

So as this week wraps up, you will notice that there is still no
tech on our Current Play list.  I kind of figured we would be
sitting pretty in at least one semiconductor stock by now, but as
S.P. Brown waxed so eloquently in yesterday's commentary, we
still feel the risk/return is setting up better in the old-
economy stocks.  That being said, if the GDP figure comes in hot
tomorrow, the charts could be singing a different tune.

Enjoy Your Weekend

Craig Seidler
Assistant Editor
www.SplitTrader.com





Definition of the Day
=====================

Philadelphia Fed Index

A monthly report issued by the Federal Reserve Bank of
Philadelphia (Third Federal Reserve District), covering changes in
business and employment trends.

For the complete definition, please go to:
http://www.splittrader.com/glossary/viewglossary.asp?glossaryid=464


===================
Split Announcements
===================

Thursday, April 26, 2001, During the Market

Healthcare Products Giant, Johnson & Johnson, Declares Split

During regular trading today Johnson & Johnson (NYSE: JNJ)
announced a two for one stock split on its common stock payable
on or about June 12, 2001 for all shareholders on record as of
May 22, 2001. Furthermore, JNJ will be increasing quarterly share
dividends by 12.5%. These events were first announced at the
Company's Annual Shareholder meeting held earlier this morning.

For the complete announcement, please go to:
http://www.splittrader.com/announcements/042601_1.asp


====================================
Friday's Expirations by Payable Date
====================================

Starbucks Corporation (SBUX) splits 2:1





=====================
SplitTrader.com Plays
=====================

The PLAY LEGEND:

SplitTrader.com Play Recommendations.

Play-of-the-Day is our number one play recommendation for the
following trading day.
Updates are just that - updates on continuing plays.
New plays are brand new for the newsletter.
Drops are closing plays that we feel have lost the advantage.

You will see:
Stock Symbol, Company Name, Closing Price, (change for the week)
Picked at date and Change since picked

Terms:
BoD = Board of Directors meeting
ADV = Average Daily Volume
dma = daily moving average

On the SplitTrader.com website we have very detailed profiles
for the stocks we play.  Please take the time to visit the site
and look up a stock's profile if you are interested in more
information.
================================================================


=========
NEW PLAYS
=========


NEW SPLIT RUN PLAYS 04/26/01
============================

None


NEW SPLIT CANDIDATE PLAYS 04/26/01
==================================

ACS - Affiliated Computer Services $69.34 +0.16 (+4.49)

It is hard to believe that there is a stock out there with
"computer" in its name that is driving to new highs.
Nevertheless, ACS which provides numerous information technology
services to the commercial sector as well as the Federal
Government is enjoying an excellent share price rally.  ACS has
been on a tear since it announced solid profits of $0.64 a share
last Friday. The 27% increase in earnings over the same quarter a
year ago exceeded analysts estimates by 3 pennies.  The company
also assured investors that it will meet or exceed current
estimates of $2.45 for the whole year, which ends June 30th.  The
solid prospects for ACS inspired JP Morgan to raise its rating to
"Buy" from "Long Term Buy".  The technical picture for ACS is
solid.  Last week, ACS found support at its 50-DMA just above
$64.00 and has been moving nicely higher this week.  The MACD is
in positive territory and is also moving higher.  Although the
Money Flow is strong, it is trading sideways, the OBV is
recovering nicely from its lows.  A good entry point may provide
itself tomorrow if ACS can trade above $70.75 accompanied by
midday volume over 250,000 shares.

Picked on April 26th @ $69.13
Change since picked +0.00
Stop Loss $64.50

 


NEW MOMENTUM PLAYS 04/26/01
============================

None


=======
UPDATES
=======


SPLIT RUN PLAY UPDATES 04/26/01
===============================

SOTR | SouthTrust Corporation $47.63 +0.78 (+1.82)

SouthTrust Corporation broke out of its trading range on Thursday.
Shares of SOTR hit an all-time high of $48 before pulling back to
a close of $47.63 on heavy volume of 1.52 million shares. SOTR has
now made three consecutive higher lows along with two higher highs
after a test of support at the 10-dma. SOTR may be ready to begin
a split run as we move closer to the 2:1 split, payable on May
11th. From a technical standpoint, support is the April 19th
intra-day high of $47.20 with additional support at $46.44, the 5-
dma. Resistance is now up to Thursday's intra-day high of $48 and
then possibly $49 or the $50 mark. Traders may consider starting
new plays a bounce off of $47.20 or a breakout above $48 on volume
greater than 500,000 shares by noon. Our stops remain at $44.

Picked on April 19th @ $46.96
Change since picked +0.67
Stop Loss @ $44.00

 


SPLIT CANDIDATE PLAY UPDATES 04/26/01
=====================================

HRB - H & R Block Inc. $53.45 -0.35 (-0.06)

H & R Block appears to be consolidating around $54.00.  In fact,
it's been hanging around this level for the past six trading
sessions.  After trading higher on Wednesday, we thought that HRB
may be regaining its momentum, but after closing the Thursday
lower, that turned out not to be the case.  Still, we think HRB
has potential because the intermediate trend remains up and
support looks strong.  As we said in Tuesday's write-up, HRB is
supported by its up-trending 10-dma, which has advanced to $52.99.
What's more, its MACD remains positive, which means there is still
a good chance that HRB hasn't lost all momentum.  As it now
stands, the stock has strong support at its 40-dma at $50.73 and
no immediate resistance until the July 1999 high of $59.50.  We
think this risk/reward trade off favors going long. To that end,
traders considering a position in HRB should look for strong
volume, 250,000 shares or more traded by noon EDT, on a move
through  Tuesday's intra-day high of $53.90 or a bounce off the
10-dma before placing their trades.

Picked on April 18th @ $52.85
Change since picked +0.60
Stop Loss @ $49.25

 

===

JEC - Jacob's Engineering $66.00 +1.95 (+6.50)

JEC has joined the two day party over at the NYSE and pushed its
way to a new all-time intra-day high of $66.75.  JEC could be one
of the big winners if the theory that the economy is headed for a
soft landing comes true.  JEC offers a slew of services for the
commercial construction industry and this sector has been
remarkably resilient during this slowdown and will likely get
better as the economy improves.  Some of JEC's strength may be
attributable to the possibility that the company is poised to make
a split announcement.  JEC has not split in nearly 10 years and
the current share price is certainly high enough to justify a
split.  The technical picture is telling us that we are enjoying a
classic momentum trader driven breakout.  Volume, which has been
more than three times the average daily volume the past two days,
is outstanding.  Money Flow and the OBV are confirming the drive
into new high ground.  Our one concern is the RSI, which is
indicating an overbought condition.  Nevertheless, one should
enjoy the ride as long as it lasts. To that end, we could see
another couple point gain tomorrow if JEC can move above $66.75.
That said, do not be surprised if we wee a little profit taking
near the close, as traders even up their positions going into the
weekend.  To protect our profits we have move our stop to $64.00

Picked on April 24th @ $62.00
Change since picked +4.00
Stop Loss @ $64.00

 

===

MKC | McCormick & Company $40.89 +0.33 (-0.31)

McCormick & Company is starting to make a recovery after hitting a
30-day low of $40 earlier this week. On Thursday, shares of MKC
traded to an intra-day high of $41.63 before running into
resistance at the 20-dma. The stock ended the session at $40.89 on
volume of 135,000 shares. MKC has tested major support at the 50-
dma and it has broken the downward trend with two higher lows.
However, volume has been on the light side so MKC may be stuck in
the $40-43 range until the volume picks up. The company is
scheduled to appear at the Goldman Sachs Global Beverage, Food,
and Tobacco Conference on May 9th, so we may see some better
volume in the near future. For now, support is the 50-dma at
$40.57 with stronger support at Wednesday's intra-day low of
$40.25. Resistance is the 10-dma at $41.12 and then Thursday's
intra-day high of $41.63. A bounce off of $40.57 or a move above
$41.12 on midday volume of at least 75,000 shares may be possible
entry points. We are leaving our stops at $38.75 to limit
potential losses.

Picked on March 29th @ $41.43
Change since picked |0.54
Stop Loss @ $38.75

 


MOMENTUM PLAY UPDATES 04/26/01
===============================

GTK - GTECH Holdings Corp $31.10 +0.03 (+1.31)

GTECH has taken a bit of a break from its foray into new high
ground.  The stock did manage to make a new high yesterday but
subsequently pulled back.  Nevertheless, GTK still possesses one
of the most impressive charts in the market due, in part, to the
excellent profit growth the company has seen from its lottery
products.  The stock has established some mild support at $30.88,
which is just above the 5-DMA of $30.72.  Traders may want to add
to positions as long as GTK can stay above the 5-DMA.  As always,
a little patience may be rewarded if one waits for a pullback
should GTK gap up two or more points on the open.  If support
fails we may see a mild round of profit taking down to the next
area of support at the 10-DMA just below $30.00.  The MACD is
still solid but the Money Flow has started to pull back.  Bottom
line is that the momentum may be slowing.  However, this scenario
can quickly change and GTK may start to soar again once it trades
above $32.00.  Momentum traders may want to buy the stock once it
crosses $32.00 on midday volume approaching 100,000 shares,
otherwise keep an eye on those support levels.

Picked on April 22nd @ $29.79
Change since picked +1.31
Stop Loss $26.75

 

===

HSIC | Henry Schein, Inc. $37.46 |0.93 (-0.54)

Henry Schein, Inc. sold off on a round of profit taking after
hitting a 52-week high two days ago. On Thursday, shares of HSIC
closed at its intra-day low of $37.46 on light volume of 205,000
shares. HSIC closed below its 5-dma for the first time since April
18th and the stock has lost some of its momentum over the past two
sessions. However, the long-term trend remains healthy so HSIC may
be able to hold the upward trend as we move closer to the earnings
release, expected on May 1st (unconfirmed). Going forward, support
is the 10-dma at $37.32 with additional support at the April 19th
intra-day low of $36. Resistance has fallen to the 5-dma at $38.20
and then $39.02, Wednesday's intra-day high. Look for entry points
on a bounce off of $37.32 or a move above $38.20 on volume greater
than 250,000 shares by noon. We are keeping our stops at $35 as
downside protection.

Picked on April 22nd @ $38.00
Change since picked |0.54
Stop Loss @ $35.00

 

===

LEA - Lear Corp. $35.92 +0.09 (+0.80)

In Tuesday's write up, we raved how Lear was upgraded by
Prudential and Credit Lyonnis.  Unfortunately, today LEA was
downgraded by Lehman Brothers.  Not that the downgrade had much
impact on trading, as LEA managed to add another $0.09 to its
value.  What's more, this automotive supplier should continue to
be the beneficiary of a lower interest rate environment since its
primary customers are the big automakers.  More importantly to us,
though, the LEA remains healthy technically.  The stock has been
riding a 45-degree uptrend line since early April, moving from $28
a share to today's close of $35.92.  What's more, LEA is showing
no inclination to backpedal.  To that end, the stock has gained
support from former resistance at $35.00, with additional support
provided by last week's consolidation level at $34.00.  As for
resistance, LEA has clear sailing until the April 1999 highs of
$50 (though it could hit mild resistance at the psychologically-
significant $40 level).  Traders considering a position in LEA
should look for strong volume, 250,000 shares or more traded by
noon EDT, on a move through today's intra-day high of $36.30 or a
bounce off support at $35.00 before placing their trades.

Picked on April 24th @ $36.20
Change since picked -0.28
Stop Loss @ $33.88

 


=====
DROPS
=====


SPLIT RUN PLAY DROPS 04/26/01
=============================

None


SPLIT CANDIDATE PLAY DROPS 04/26/01
===================================

None


MOMENTUM PLAY DROPS 04/26/01
=============================

None


========================
Friday's Play-of-the-Day
========================

Thursday, April 26, 2001
=============================

MKC | McCormick & Company $40.89 +0.33 (-0.31)

Thursday's Comment:

McCormick & Company is starting to make a recovery after hitting a
30-day low of $40 earlier this week. On Thursday, shares of MKC
traded to an intra-day high of $41.63 before running into
resistance at the 20-dma. The stock ended the session at $40.89 on
volume of 135,000 shares. MKC has tested major support at the 50-
dma and it has broken the downward trend with two higher lows.
However, volume has been on the light side, so MKC may be stuck in
the $40-43 range until the volume picks up. The company is
scheduled to appear at the Goldman Sachs Global Beverage, Food,
and Tobacco Conference on May 9th, which could lead to better
volume in the near future. For now, support is the 50-dma at
$40.57 with stronger support at Wednesday's intra-day low of
$40.25. Resistance is the 10-dma at $41.12 and then Thursday's
intra-day high of $41.63. A bounce off of $40.57 or a move above
$41.12 on midday volume of at least 75,000 shares may be possible
entry points. We are leaving our stops at $38.75 to limit
potential losses.

Picked on March 29th @ $41.43
Change since picked |0.54
Stop Loss @ $38.75

 





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